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By Laura De Mori, Senior HR Auditor and Team Leader, Top Employers Institute
By Laura De Mori, Senior HR Auditor and Team Leader, Top Employers Institute

Inside the mind of the HRD on … Performance Management

Performance management can mean different things to different organisations. For many HRDs, it comes down to involving employees in meeting the business’s missions and goals, while helping them to set and achieve their own. However it is defined, one thing has become clear during 2020 to our Top Employers: effective performance management systems have clearly shown their value in the face of the challenges presented by the Covid-19 pandemic.

Performance and the pandemic

When performance management systems first became commonplace in businesses back in the 1950s and 1960s, their purpose was limited to assessing an employee’s performance. Based around a centrepiece of the annual performance appraisal, they earned a reputation for being reactive, retrospective and rigid. By the start of 2020, however, performance management conversations within our Top Employer organisations had long since evolved towards something more frequent, proactive, forward looking and flexible in nature.

The scope and uses of the performance management process have also broadened. By the time the Covid-19 pandemic began, HRDs in Top Employers were already heavily invested in placing workplace issues, such as wellbeing, stress management, values, workplace flexibility, inclusion, leadership and communication at the centre of their thinking around performance management. And the pandemic in effect accelerated this movement towards a deeper sense of humanity in the relationship between employers and employees.

Engagement drives performance. And performance drives engagement.

When the COVID-19 pandemic turned the corporate world upside down, highly developed performance management systems came into their own. It also become clearer that high levels of performance create virtuous circles in other ways. Research published in the Harvard Business Review showed that while engagement had long been seen as a key driver of performance, the reverse was also true.

When researchers looked through the logs of thousands of workers for clues to what drove their engagement, they found an overriding need: “The need to get things done.” In other words, high levels of performance, particularly those demonstrated heroically by so many workers in the midst of a pandemic, in turn reinforced and improved levels of engagement.

The impact of remote working is a good example of how robust performance management systems can show their worth. Widespread remote working changed the rationale for performance management, making it less about looking to identify poor performers or decide who gets a promotion. Instead, the essence of strong performance instead needed to focus more on how to strengthen organisational culture when many or all employees are dispersed.

This in turn meant more team input around how to communicate and acknowledge the vastly different circumstances faced by team members. This is something which required managers to show more flexibility and more heart. And when given this increased level of support, high performance levels could be achieved through higher levels of commitment, loyalty and trust between managers and employees and within teams.

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Always room for improvement

Of course, there are always areas for improvement in any workforce, so how can performance management help Top Employer organisations make further gains in those areas that need it the most? Our latest research among [over 1600? Or higher now?] of our certified Top Employers worldwide shows that engagement surveys are showing the Top 5 priority areas for employees are:

  1. Development opportunities.
  2. Total Rewards
  3. Recognition.
  4. Quality of leadership.
  5. Internal communication.

It’s worth noting that performance management systems are not explicitly seen as a priority area for improvement. Instead, they act as the key mechanism through which these gains can be made in the areas shown above. So where are HRDs now focusing their time and attention?

Performance management: driving the new agenda for Top Employers

Here are 4 key areas in which performance management systems are helping make a difference for HRDs among our certified Top Employers.

1) A focus on development. This essentially means moving further away from evaluating performance retrospectively and more towards looking forward in order to improve performance. It’s encouraging therefore that among our Top Employers, 88% already have a framework of development strategies to help employees unlock their potential and meet goals.
2) Employee Centricity. This is about putting employees first by letting them have more say in setting the agenda, particularly in those areas that have come sharply into focus during the pandemic, such as wellbeing, work-life balance, culture & values. 94% of our Top Employers do this by letting their employees provide input for their performance objectives, while 75% say employees have a leading role in scheduling meetings and seeking feedback from managers.
3) On-going & collaborative feedback. This is shown by having more 1-2-1 meetings and regular check-ins, with a greater emphasis on sociability and less on formality. It’s good to know that 85% say managers and employees have ongoing informal discussions about performance on at least a monthly basis.
4) Agility. This means simpler and more flexible ways of working, as well as a clearer focus on collaboration, transparency and diversity in responding with agility to any business challenge. 89% of our Top Employers believe that objective setting is flexible enough to align with a changing work context, while 76% say that employees can include goals related to team performance and/or the network contribution and 58% believe that their goals are transparent for others to see.

What has become obvious is that the best performance management systems are those that have focused on a higher frequency of conversation, less formality and more forward thinking around career development. Those that have engaged with these principles have created a positive and mutual uplift in both engagement and performance. And while there are many new areas of improvement for performance management to tackle in 2021, it is highly encouraging that our certified Top Employers are already taking positive steps in these areas as well.

Top Employers Institute is the global authority on recognising excellence in people practices. We help organisations accelerate their people practices to enrich the work of work.